by Cem Sertoglu, Partner at Earlybird Venture Capital in Istanbul

February 25, 2010

I am very intrigued by Polyvore, the fashion content community that is innovating on an interesting aspect of user-generated content. The power of crowdsourcing when applied to crativity and taxonomy is very fascinating and can lead to impactful search innovation.

This is especially relevant for hard-to-categorize and segment areas such as fashion. Machines have not been as effective tackling this problem, where they perfom in the identification of patterns and items, but fail in the context, as we saw with Like.com. Polyvore will be an interesting company to watch. I am blown away by some of the stats shared with GigaOm:

it sees 30,000 new sets created daily. It has 140 million page views
per month, 22 million of them from embedded sets, which are often found
on fashion blogs.

The level of insightful indexing that type of data can enable will be enormous. And that will be very very valuable and monetizable.

February 22, 2010

My friend Auren has a good post on a very important responsibility for entrepreneurs: the expedient killing of stuff that is not bringing value. He summarizes the issue:

Being able to kill things early is essential to the long-term
growth and success of any company. But recognizing that you should be
searching for things to kill is the first step to building a better
company. ...As your company grows, you’ll have more things – both big and small
– that either weigh down growth or are not core to long-term success.
The companies that work proactively to get rid of these issues and
devote resources to the areas that matter are the ones that will be
able to remain nimble, innovative, and win.

This is also interesting to me as a VC. Usually, we are not in a position to make the killing decisions at our portfolio companies. So, our job is to prod our entrepreneur partners in their constant pruning of their organizations, and provide the necessary encouragement for them to take action.

February 20, 2010

I think we are at the beginning of a new wave of innovation in how we interact with various types of computers. The fact that my laptop looks like a typewriter makes it less and less suitable for a lot of tasks for which I use it (actually, it's quite appropriate for typing this blog, until voice-to-text is perfected). That's why there have been many diverse I/O devices for specific tasks, including mice, joysticks, gamepads, etc.

It feels like we're at an inflection point in the area of interfaces. I am amazed and excited by the prospects offered by companies like Oblong, and innovation such as this. As computers proliferate and enter many other types of devices, the scope of interface innovation will broaden. I suspect there will be an enormous economic opportunity associated with this area.

February 19, 2010

S&P has upgraded Turkey's sovereign credit rating today. I think i's well-deserved and long overdue, given the level of resiliency Turkey's shown through the global credit crisis. It's also a bit ironic that the move coincided with recent troubles all over the EU, particularly Greece and Portugal (via Marketwatch).

We have not seen any bank failures, significant stimulus moves by the state, or any large company busts. Turkey's held up remarkably well and that performance supports my overall bullish stance on my country.

February 11, 2010

I have been writingfor a while the enormous value of the social graph that resides within email. Finally, Google has made a very significant step to capitalize on this. Frankly, I was expecting Yahoo to beat Google in this race, primarily since Yahoo has to do something bold at this stage and the gigantic installed base of Yahoo Mail users. I suspect they still might but Google looks like the early bird this time around.

Gene Volovich commented about the walled garden aspect of Gmail. I agree with him. However, Google is learning to be open. In fact, anyone looking at Twitter would understand that it was its openness that led to Twitter's growth. The only way for Buzz to fulfill its destiny is to be open. I have no doubt Google would know this.

For me, the bottom line is, for a gmail user, the amount of social insight residing in gmail far exceeds facebook. This may not be true for users who split up email usage for personal and professional communications. However, Gmail usage brings habits with it and if you deal with your professonal email through the Gmail interface, the conversation threads are very natural. And the status updats/tweets context is identical to the conversation thread. In a funny way, the Gmail model, when established, already laid the foundation for Buzz, way before Facebook statuses or Twitter.

I see Google Buzz as a very important step (and experiment) in social communications, and a strong move by Google in the race to own the identity layer of the internet.

February 02, 2010

Well because as we transition to a Startup Ecosystem driven by direct
payment & subscription business models, i want to make it clear how IMPORTANT it is to make sure users don't forget their passwords. If they forget their password, and/or can't recover it, then guess what MoFo -- YOU DON'T GET PAID.

While I agree with his point, he then goes on to assert that the frequent-use models don't have this problem and therefore should win the transactions/subscriptions business models, which is where I start to get question marks. He provides examples from his tenure at PayPal and concludes that since Facebook and Google are the most frequently used properties, this is their game to use.

I also agree with the last point. However, I think it's a gross simplification to tie the causality to frequent use. It's the identity layer that counts. Not the frequency. I play some casual games daily. but they don't know about me nearly as much as Google or Facebook does. It's that intimate knowledge of who I am that counts!

TBI Research is pointing out the revenue potential demonstrated by some recent data at Facebook through payments. It's not surprising that the results are positive. Payments are directly tied to identity. PayPal is under huge threat here. In fact, once the payment structures start to slip, eBay will be under threat as well.

The identity layer is enormously valuable. The biggest contenders for it are Google (because of Gmail) and Facebook. The identity layer will allow these companies, as well as those who will be able to grab a piece of it, to challenge some very large internet commerce areas. Payments are a great candidate. Others will be classifieds & listings, and loyalty programs.

I think there still is an opportunity in the Turkish identity layer, despite Facebook's domination here. Not sure how one should play it but I continue to think about it.

February 01, 2010

I'd been away skiing for a week and now I'm back, refreshed and excited about the year ahead of us. I was gone in a pretty busy week that saw the announcement of Apple's iPad, which I think is getting underestimated. But on to the more interesting development of the week for me: First Round Capital's Exchange Fund.

Josh Kopelman describes it as:

This exchange fund
was created to allow First Round Capital entrepreneurs to contribute a
small piece of the stock they own in their company -- and share in the
upside of all the other companies. The fund is only available to
qualified First Round Capital portfolio companies and First Round
Capital does not receive any
economic upside from the fund. The goal of the fund is to allow our
entrepreneurs to get the benefit of some tax efficient diversification
without giving up their upside prematurely.

This is an issue I had thought about when we were busy growing SelectMinds. I'd even talked to my fellow NY-based entrepreneurs Marc Cenedella and Mark Harris about it circa 2004. We'd agred it would be tough because of valuation metrics. However, when structured in the context of a VC fund, that problem is probably mitigated. There are a few other issues raised in the comments under Josh's post.

All in all, I think it's a great way to try to diversify the risk. I'll be watching excitedly.